Monday, February 01, 2010

SID [シド], Shougen, and a Creative Moment

I'm currently working on a trading framework; it is rule-based, but not mechanical.

It looks across varying time periods and calculates the probabilities of hitting upside and downside price targets for each of the periods, given the volatility of each period.

It calculates money flows for each of the time periods to gauge trending and shifts in trending.

It scans the time periods for a particular setup in which concentrated buying against a selling trend fails to take out an upside target or concentrated selling against a buying trend fails to take out a downside target.

It enters the market in the direction of the trend after the failed countertrend movement, with the price targets as potential exits.

The time periods vary from intraday to multi-day, creating diversification by time frame.

The framework came to mind while I was listening to the song and watching the video "Shougen"by a group called SID (シド , above).

Shougen means "testimony".

The song is taken from a Japanese novel in which a married woman has an affair and kills her lover in an act of ultimate love. She is tried in court; the song is her defiant testimony that she acted for reasons others can't understand. A full translation is here.

I wish I understood the creative process better. All I know is that the "testimony" triggered the thought that, instead of trading setups within a time frame, it makes sense to trade time frames across a single setup.

By normal trading standards, it's the wrong thing to do, but, like the woman on trial, I'm convinced of its rightness.

About Me

Author of The Psychology of Trading (Wiley, 2003), Enhancing Trader Performance (Wiley, 2006), The Daily Trading Coach (Wiley, 2009), and Trading Psychology 2.0 (Wiley, 2015) with an interest in using historical patterns in markets to find a trading edge. As a performance coach for portfolio managers and traders at financial organizations, I am also interested in performance enhancement among traders, drawing upon research from expert performers in various fields. I took a leave from blogging starting May, 2010 due to my role at a global macro hedge fund. Blogging resumed in February, 2014, along with regular posting to Twitter and StockTwits (@steenbab). I teach brief therapy as Clinical Associate Professor at SUNY Upstate in Syracuse, with a particular emphasis of solution-focused "therapies for the mentally well". Co-editor of The Art and Science of Brief Psychotherapies (American Psychiatric Press, 2012). I don't offer coaching for individual traders, but welcome questions and comments at steenbab at aol dot com.